Centennial Throes of Domestic Beauty Makeup

Li Yutong

Chengdu Yingxing Cultural Media Co.,Ltd.,China

In October 1913,the then U.S.President Wilson pressed the button for igniting 8-ton explosives in Washington.The great significance of the 8-ton explosives is that it blew open the last barrier of Panama Canal so that the water from the Atlantic and the Pacific can simultaneously be converged to the canal.It means that the Panama Canal,which was paid 10.0 billion dollars for by the U.S.and built for 10 years,was basically completed.For celebration,Wilson decided to hold the 1915 Panama Pacific International Exposition.

On the year before the exposition was held,Wilson dispatched special persuaders to Yuan Shih-kai,hoping that China could attend the competition with proud products.Naturally,Yuan thought that it was a rare chance for China to go to the international stage,so he immediately founded the Ministry of Agriculture＆Commerce and the Bureau of Competition Affairs and encouraged merchants all over China to sign up.In two months,more than 100,000 entries were collected.With these entries,the Chinese delegation started in the winter of 1914 and arrived at San Francisco in more than 20 days.In this competition involving more than 30 countries,the products of China won 57 medals.The liquor of China conquered the jury.Moutai liquor,which was very hard to be got,became famous for an“accidental” drop.The then domestic beauty makeup brands also sprang into fame there.

That year,Xie Zhenzhai,the fourth generation of proprietor of the domestic brand Xie Fuchun,which was established 84 years before,came to the U.S.by steamer with “duck egg powder,iced musk oil and oriental solid perfume”,which were called three wonders of the Xie Family.The three products won two silver medals at Panama Pacific International Exposition.This event made Xie Fuchun and the Chinese feel proud even today.

After Xie Fuchun became famous,domestic beauty makeups occupied a place among international advanced brands.For a long time afterwards,many people flocked to Yangzhou Xie Fuchun specially for buying face powder and pieces,and the fame of Xie Fuchun even spread to Southeast Asian countries.

However,everything has changed as time passes by.The past glory has become a history.Today,Taobao Flagship Store of Xie Fuchun has only 1.09 million fans.The number of fans of Perfect Diary or Florasis stores,which were founded in recent years and got very popular,is ten times that of Xie Fuchun.

However,the rise of Perfect Diary and others does not mean that the domestic beauty makeup has found the second Xie Fuchun.In the ranking list of global ten advanced makeup brands for 2021,no brand came from China.Therefore,the domestic beauty makeup industry is always caught in medium-and low-end throes.

Then,what wrong has the domestic beauty makeup industry done in the centennial vicissitude?

1 Synonym for high grade and expensiveness

In ancient and modern China,beauty makeup was a synonym for high grade and expensiveness.For example,rouge was actually an expensive imported product.In order to strengthen the tie between the Han Dynasty and states of the Western Regions,Emperor Wu dispatched Zhang Qian to the Western Regions.Zhang Qian not only married a wife of the Western Regions but also brought back a lot of exotic cultures and ethnic specialties,among which was rouge.Later,Emperor Xuanzong,a grandson of Empress Wu Zetian,would allocate rouge expenses to Yang Yuhuan and her sisters.The money was basically in one million tael of silver.What concept? According to the then purchasing power,the degree of material wealth during the reign of Emperor Tai Zong(627-649) of the Tang Dynasty was very high.Five pennies can afford a bucket of rice,and a tael of silver can afford 200 bucket of rice,about 20 dan.One dan is equivalent to about 59 kilograms.Converted into RMB,the then one tael of silver is equivalent to about RMB 4,000 yuan.

The rouge was so expensive that common people was unable to afford it at all,so they nicknamed the whitening powder used by Yang Yuhuan “Yang Guifei powder”.Seduced by the costly rouge,someone even stealthily dug the soil of her grave after her death,thinking that even the soil tainted by her rouge had miraculous whitening effect.This behavior is incredible today.However,in ancient times,it was reasonable.The Chinese women’s perception of and pursue for beauty had been following the paces of the aristocrats and imperial courts.Things used by powerful and influential were naturally costly and excellent.

In 1864,Sun Chuanhong opened a face powder store named “Kong Family Face Powder” in Hangzhou.The clients all ridiculed him,saying that the name was too old-fashioned.Soon afterwards,Empress Dowager Cixi used Kong Family goose egg powder and became an ash-level fan of Kong Family face powder.Therefore,in the imperial palace,from the empress to imperial consorts,this face powder was put on dressing tables.Those who had ridiculed the name became frequent visitors to the store,making Kong Family face powder very popular.Before long,Sun Chuanhong changed the store name to“Kophenix”.In the 1920s-1930s,Kophenix almost monopolized local cosmetic brands of Hangzhou and even became a high-end symbol for madams and young ladies of high-society circles

Xie Fuchun,which was founded 30 years earlier than Kophenix,had obtained a leading volume of word-of-mouth marketing in China before becoming internationally famous at Panama Pacific International Exposition.In the Ming and Qing Dynasties,Yangzhou face powder was presented as “tributary powder” to the imperial court.An inheritance to Yangzhou face powder,Xie Fuchun was renowned for its three wonders,i.e.“perfume,powder and oil”,and served as a brand in the imperial court.

Except for the imperial palace,celebrities all loved Xie Fuchun.Zhang Ailing,who “would comb her hair into an S bun at eight years old and wear high-heeled shoes at ten years old”,was very fond of the face powder of Xie Fuchun,which she had mentioned several times in her novel The Golden Lock as an image symbol for the graceful women she described.Mei Lanfang would not come onto the stage unless applying the face powder of Xie Fuchun.The face powder specifically used by him was “duck egg face powder” of Xie Fuchun.Even today,the story about Mei Lanfang refusing to perform for being unable to find duck egg powder can still be heard on street stalls.

During that period,apart from Kophenix and Xie Fuchun,there were two other domestic beauty makeup brands,i.e.VIVE of Shanghai Guangshenghang and Pechoin (called Fubeikang at that time).The former was highly praised by Shanghai debutantes,and the latter was deeply loved by the then stars such as Ruan Lingyu,Zhou Xuan and Hu Die.

At that time,even brands not deeply loved by Shanghai debutantes or Chinese celebrities were not sold at a low price.At a magazine advertisement of Shanghai East China Chemical Plant in 1935,a largesized Peony lipstick sold at 4.5 silver dollars,tantamount to the price of 35 kg of rice at that time.

That is,a domestic lipstick had to be exchanged for with grains of a family of three people for one month.

2 A key time node

In tracing the history of the development of the beauty makeup industry,the decline of Xie Fuchun,Kophenix and other then brands is closely related to the historical process after the founding of new China,including the nationwide public-private partnership campaign and the later cultural revolution.During that period,centennial brand enterprises such as Xie Fuchun and Kophenix were drowned in the flood.Shanghai Guangshenghang made public-private partnership with Dongfang Chemical Industry Society to found Shanghai Mingxing Household Chemicals Factory,which was the predecessor of today’s Shanghai Jahwa.The era background is a force majeure factor,yet the reform and opening-up serve as a key node for the beauty makeup industry in China.

George Fisher,CEO of Kodak once said,“As long as half of the population in China use a 36-piece film every year,it is sufficient for enlarging the global film industry by 25%.If 500 more pictures are shot every second in China,it is tantamount to producing a new market with the scale of Japan and the U.S.”

The Chinese market was undoubtedly profitable for foreign funds,which crazily entered China.From 1979 to 2000,China cumulatively attracted 346.2 billion dollars of foreign funds.With the entry of foreign brands,the West brought a fashion impact to the Chinese.

In the 1990s,Pierre Cardin representing top grade,fashion and luxury carried out a series of activities in China.For example,in December 1978,Pierre Cardin appeared in streets of Beijing,wearing a long wool coat with his hands in the pocket.The fashionable style and wide shoulder pad design were very striking in the crowds wearing uniform Chinese tunic suits at that time.Impacted by that,plus TV popularization and prevalence of movies and teleplays,the exaggerating and bold makeup color of Western stars awakened the Chinese people’s realization of fashion and beauty.For the cosmetic industry of China,it was a new starting point.Though the cognition about beauty and fashion originated from the West,for domestic brands,the Chinese market at that time was a blank page with increasing consumption potentials.

Obviously,foreign brands saw this blank.In the eyes of L’Oreal,China was the most potential market in the world.In 1996,Gasparrini Paolo was appointed as CEO of L’Oreal (China) Company.The first thing he did in China was to set up a factory in Kunshan,Suzhou.Then,in 1997,he established the headquarters of L’Oreal (China) in the downtown area of Shanghai,though there were only 15 employees at that time.Before L’Oreal came,Johnson ＆Johnson,Estee Lauder,Unilever and Avon had come to China.P＆G entered Guangzhou with OLAY.Helena Rubinstein established the first counter in Isetan,Meilongzhen of Shanghai in the Millennium.

Domestic beauty makeups were also springing up crazily:Li Zhida,a native of Beijing,came southwards to Shenzhen to found Shenzhen Raystar Co.,Ltd and promote Mininurse brand.Tjoy founded Nanjing Canon Biochemistry Co.,Ltd,placing Tjoy skin care products onto the market.A welfare enterprise originally set for employment of the handicapped in Beijing was renamed Dabao Cosmetics Co.,Ltd.Zheng Chunying moved his beauty center(Jala Group) to Shanghai,and produced brands such as Aglaia,Chcedo and Maysu.Hou Juncheng,a native of Wenzhou,after acting for skin care products for six or seven years,decided to start up his own business and so established Hangzhou Proya Cosmetic Co.,Ltd.His fellow-townsman Cai Ruqing established Guangzhou Guerlain brand.Sun Huaiqing established Marubi.Feng Shuai established Inoherb.Shanghai Jahwa promoted Herborist.Mao Geping,who became poplar for the miraculous makeup technology “applying cosmetics as if to change a head”,founded MAOGEPING…

According to statistics,there were only 200 cosmetic enterprises in China in 1979,while there were more than 4,000 cosmetic manufacturing enterprises in 2011.

Even if foreign brands swarm in,domestic brands needn’t worry about their own products.As Zhang Ailing says,women are rouge animals.After the pursuit for fashion and beauty was awakened,the market would become wild.Don’t worry about your products being unsaleable,just worry about your supply falling short of demand.On the one hand,people’s strong demand for beauty hastened the generation of new jobs and activities.In 1993,the Ministry of Labor issued Vocational Skill Standards of the People's Republic of China for eight work types including beautician and hairdresser.In 1996,the Ministry of Internal Trade,the Ministry of Labor,State Administration of Industry and Commerce and CCTV jointly sponsored a national TV lecture on beautician technology grade training.On the other hand,domestic beauty makeup brands achieved a good performance.By relying on the sunscreen concept,Mininurse appeared among the top three in the skin care product category from 1997.By relying on advertising promotion of Hunan Satellite TV,Proya created a sales myth within only 3 years.As MAXAM of Shanghai Jahwa was reported in the first issue of China Top Brands in 1993,its hand cream was almost known to every household.In 1995,Shanghai Jahwa directly went to Hong Kong to toll and become the first listed cosmetic company in China.

However,it’s a pity that from that time on,domestic brands can hardly be seen in the high-end market.

3 Imitation,plagiarism and acquisition

It’s a pity that domestic beauty makeup industry made a wrong step in such a large empty market from the very beginning.Brand positioning relied on plagiarism or imitation.From name to entrepreneurial story,they all pursued for westernization and so lost the local brand features of China.

Chcedo is very similar to Shiseido.There is a difference of only a single word between Proya and L’Oreal or Aupres subordinate to Shiseido.Cai Ruqing once said,he imitated France Guerlain to name his brand “Guangzhou Guerlain”,which was later changed to Guerlain Beauty.The smooth operation dumbfounded consumers of China.Whether a product can become an advanced brand never depends on a “foreign” mask.Apart from problems in brand positioning,domestic brands did wrong in market strategy.

Many brands such as Chcedo and Proya followed the strategy of “surrounding the cities from the countryside” from the very beginning,starting from two-or third-tier cities and rising slowly to first-tier cities.In the opinion of Zheng Chunying,the founder of Chcedo Group,domestic brands only study channels but do not study consumers while foreign brands only study consumers but do not study channels.Even subsidence of international brands would constitute no threat because the base market is very large.

No one can swallow the market in one gulp.It’s true that to grab markets in low-tier cities,the share and reputation can be increased to some extent.However,it means that the tonality of brands can only be closeness to civilians and low price.They can only follow a mediumand low-end route.When the medium-and low-end image of a brand is deeply rooted among the people,it’s very difficult to go from low to high.

Foreign brands are very clever.Due to cost and industrial chain problems,they have followed a highend route ever since entering the Chinese market and firmly occupied the Chinese high-end market of beauty makeup.In addition,to follow a high-end route does not mean abandoning medium-and lowend markets.After the high-end market is cultivated to be mature,the stared at medium-and low-end markets trained by local brands.

Facing the low-dimensional attacks launched by foreign brands,none of the more than 4,000 enterprises had the ability to fight back.Therefore,mergers and acquisitions were performed in the Chinese beauty makeup market one after another.Mininurse was acquired by L’Oreal.45 days later,Yuesai,one of the three local major skin care brands,fell into the bosom of L’Oreal.Tjoy was acquired by Coty Group,the fifth largest cosmetic manufacturer in the world.American Johnson ＆Johnson acquired Beijing Dabao with RMB 2.3 billion yuan.

In fact,when L’Oreal proposed to acquire Mininurse in the Millennium,Li Zhida was contemptuous.At that time,Mininurse was among the top three in the Chinese skin care market.

However,Li Zhida had never expected that the market share of Mininurse had never increased from that moment on.On the contrary,its gap from the first brand Olay was expanded from two folds in 2001 to six folds in 2003.Li Zhida knew that he could not defeat foreign brands at all.Therefore,at the end of 2003,he sold Mininurse to L’Oreal and guaranteed that he would no longer enter the cosmetic industry.

After a foreign brand acquires a domestic brand,it has got new channels apart from expanding production lines.For example,when L’Oreal acquired Mininurse,Mininurse already had more than 280,000 sales networks.It means that L’Oreal could expand his own sales channels by using Mininurse’s gigantic sales networks.

Take the combination of Johnson ＆Johnson and Dabao as another example.Originally,Johnson ＆Johnson had no factory for producing daily cosmetics in China,and had to transport products produced abroad to China for sales,especially the famous Johnson ＆Johnson baby products.When Johnson ＆Johnson intended to expand markets and put its baby products to extensive two-and three-tier cities,this sales method could hardly be effective.

Just like Mininurse,Dabao,as a famous brand in two-and three-tier cities,had gigantic sales networks and mature local production lines,which were what Johnson ＆Johnson wanted.

As domestic brands declined,Chinese consumers became fonder of Western brands.Especially,when the plastic surgery industry was flourishing,many people required doctors to shape them into Westerners.Department stores had a selection preference.Generally speaking,cosmetics would be placed on the first floor of a department store,and consumers tended to judge the positioning and grade of a department store based on the brand grade of the cosmetics.Therefore,based on the medium-and low-end positioning of domestic beauty makeup,the department stores preferred advanced brands and strove to introduce famous international brands.

In 2015,among the top 20 brands of department stores,the only domestic brand was Herborist of Shanghai Jahwa,which only ranked in the 8th place;all the other 19 were foreign brands,with Estee Lauder,Lancome,Dior,Chanel,etc in the front rank.

4 New hope and old problems

The development of the live broadcast industry and the emergence of the new generation of main consumers represented by the post-90s generation seem to give hope to Chinese beauty makeup brands.

Ning Nanshan,an internet celebrity researcher of Renmin University of China once told a story:in the 1980s,a professor of China went to Sweden and was shocked by the Western material civilization.In the essay to a magazine,he wrote,the hotel he lives can offer hot water for 24 hours and the telephone on the bedside table can be put through to more than 100 countries and regions in the world.All these were rare in China of that era.

However,everything is different today.The Z generation has a very strong sense of national pride.From the very moment they were born,they are living in an outstanding national environment with abundant national cultures.They do not admire foreign countries.Instead,they have their own national pride and do not think that the moon in a foreign country is rounder than that of China.In a questionnaire survey carried out by China Youth Daily for college students in 2020,nearly 80% of interviewees claimed to support domestic products.It is due to the chasing of this generation that domestic brands such as Lining and Anta become popular in recent years.

The live broadcast industry began to develop feverishly from 2016,in which,more than 300 online live broadcast platforms emerged in China and e-commerce was involved in it.In March,Mogujie launched the live broadcast function.Two months later,Taobao Live was launched.In 2018,the short video platform made this field more thriving.

In 2019,e-commerce live broadcast became popular everywhere,and OMG became a buzzword.Li Jiaqi,who created that word,also became an internet celebrity.Intuitive data show that the e-commerce live broadcast market is 19.0 billion yuan in 2016,and this figure should have turned to 433.8 billion yuan in 2019.

Therefore,when Huang Jinfeng started Yatsen,the parent company of Perfect Diary in a shabby office building of Guangzhou in the summer of 2016,it could only be said that he caught up with a good era.Though the office computers they used at the beginning of entrepreneurship were left over from a bankrupt company,Perfect Diary was unable to be kept from being successfully listed within a short period of four years by relying on the prevailing live broadcast and the patriotism of the Z generation and creating one sales myth after another.

E-commerce live broadcast gives new domestic brands an opportunity of rapid rise,making them able to accomplish the capital and reputation accumulation in the early period of entrepreneurship.It is new hope afforded by the era to the domestic beauty makeup industry.The listing process of Chinese cosmetic enterprises can almost be deemed as fractured.It was 16 years after Shanghai Jahwa was listed that the industry ushered in the second listed company Lovefun,followed by Proya and Yatsen.However,behind the new hope,the domestic beauty makeup industry still faces old problems:competing in price and no highend product.From the beginning of the reform and opening-up to the present,the fair or low prices of domestic beauty makeup products have never changed.

Even Li Jiaqi himself thought that domestic beauty makeups are still competing in price now.Florasis,which had got an annual income of 3.0 billion yuan in the third year after its founding,had a relatively high price in the market before finding Li Jiaqi.When Li Jiaqi saw the price,he directly rejected Florasis.For him,prices of most domestic brands were below than 100 yuan,and so it was impossible to sell them at more than 100 yuan.It was through the personal visit of Wu Chenglong,the founder Florasis that they eventually reached an cooperation.Of course,the prices were compromised.In the opinion of Wu Chenglong,Florasis should be defined more as an internet cosmetic company because it has no its own direct factory but cooperates with other cosmetic companies on an OEM basis.

Actually,all emerging domestic beauty makeup companies can be defined as internet cosmetic companies.Internet companies are very good at storytelling.In the matter of “storytelling”,domestic beauty makeup companies have learned the quintessence of Western brand science.However,the agency processing of products directly highlights the key that makes domestic beauty makeups unable to become high-end and contend against international major brands-lack of R＆D and technical innovation power.

In the final analysis,the value basis for advanced makeup products relies on R＆D.Major foreign brands pay attention to R＆D.Schueller,the founder of L’Oreal earned the first pot of gold by selling hair dye.When he founded the company,the company had only two rooms,one being the demonstration hall,and the other being the laboratory.In the daytime,he peddled products at a hair salon.At night,he made R＆D in the laboratory,forgetting all about eating and sleeping.

Chinese cosmetic brands do not pay attention to R＆D all along.For example,in 2009,L’Oreal Group had 18 R＆D centers,13 assessment centers and 3 000 experts from more than 60 countries in the world while Shanghai Jahwa had only one technical center composed of more than 100 researchers.It was woefully inadequate.

In 2021,the National Enterprise Credit Publicity Information System showed that Perfect Diary(Yatsen) had 38 patents,but it was a pity that they were all appearance patents.

The domestic beauty makeup industry is reluctant to invest in R＆D.In 2020,the R＆D expenditure of Perfect Diary was only 67.00 million yuan,accounting for only 1% of the operation receipt.Due to low investment in R＆D,the domestic beauty makeup industry has not formed its own core technologies.Therefore,when L’Oreal had anti-aging Pro-Xylane,Estee Lauder had brown bottles,Johnson ＆Johnson had Vitamin A derivatives,and P＆G had nicotinamide,domestic beauty makeups had only good-looking appearances.The cutthroat problems of raw materials are still restraining the domestic beauty makeup industry from becoming high-end.One major gap between Chinese local beauty makeup and international grand brand lies in raw materials.For example,the raw material palm oil for producing glycerin or propylene glycol has to be imported from Southeast Asia,and silicone oil has to be imported from America,Europe or South Korea.It can be said that the raw materials for the whole industry of Chinese cosmetics cannot bypass international companies.There is also a gap in efficacy validation of raw materials.For example,as far as Ectoin,a guardian angel for skin is concerned,German Merck Group produced a large quantity of clinical reports and experimental data to prove its efficiency on cellular tissues after dozens of years of R＆D.When the patent expires,Bloomage Biotech or other Chinese enterprises can also produce it.However,the validation data established by Merck in dozens of years can hardly be caught up with by Bloomage Biotech in a short period.

There is still a long and uneven way to go for the domestic beauty makeup industry following a highend route.

5 Conclusion

Once,a boss engaging in domestic beauty makeup brands said to the journalist,“If you sell domestic beauty makeup at a high price,you will be scolded.”It is true because Perfect Diary was scolded for price increase in 2020.At that time,the most salable lipstick product of Perfect Diary was pleuche lip glaze,sold at 59.9 yuan.After that,the new product “Xiaoxigen lipstick” endorsed by Zhou Xun was sold at 79.9 yuan.A mere increase of 20 yuan made Xiaoxigen lipstick taunted by consumers for “small dose and unworthiness” and come onto the top search list.

New products have form but no spirit while time-honored brands have spirit but no soul.Those products with Chinese characteristics,e.g.Xie Fuchun are still not accepted by consumers for product form reasons.People would rather buy hair care essential oil at more than 100 yuan than buy Xie Fuchun osmanthus oil at more than 30 yuan;would rather buy an emulsion portfolio from Japan or South Korea at 300～400 yuan than buy vanishing cream at more than 20 yuan;would rather buy a lipstick at 200～300 yuan than buy a packed rouge at more than 60 yuan.

Now,the cosmetic market of China has become the second largest one in the world,second only to that of the U.S.Of it,the skin care product market has reached 244.4 billion yuan,with a year-on-year increase of 14.7%.According to institutional prediction,the compound growth rate of the cosmetic industry will remain more than 13% in the future five years,higher than that of domestic social consumers.It has become another consumption hot spot following real estate,automobile and tourism.

In this gigantic consumer market,there is really little time left for the domestic beauty makeup industry.CDC